Tidal Energy Ltd, the developer of DeltaStream, Wales’ first full-scale tidal power generator, has announced an important deal with EDF Energy, marking a significant milestone in the commercial development of tidal power in the UK.
DeltaStream will be amongst the world’s first grid-connected demonstration devices to generate green, sustainable and predictable tidal power. The device, developed by tidal stream technology company Tidal Energy Ltd (TEL), was unveiled in August at Pembroke Port by The First Minister of Wales, the Rt. Hon. Carwyn Jones AM. It will be installed in Ramsey Sound, Pembrokeshire, and is expected to begin generating electricity for Welsh homes shortly afterwards.
The Power Purchase Agreement (PPA) announced guarantees that EDF Energy, the UK’s largest producer of low carbon electricity, will purchase electricity and renewable certificates from the device for the first year of the project at a pre-agreed price, ensuring that it will be able to generate revenue for its owners, TEL, from both the electricity market and the Government’s Renewables Obligation scheme. The Government has earmarked tidal power as a priority technology, allocating a subsidy of 5 ‘ROCs’ for each unit of electricity generated, in order to fast-track its commercial development.
Power Purchase Agreements not only provide certainty of income for projects such as DeltaStream, but also provide a clear and useful benchmark of revenue for future investors and lenders. As such, the value of the contract to the DeltaStream project will extend well beyond its first year.
Martin Murphy, Managing Director of TEL, comments:
“DeltaStream is not just about proving a new, innovative technology – it is about proving that tidal power can make a real and lasting contribution towards the UK’s renewable energy targets and energy security. Taking the first steps to commercialisation, by securing a buyer for the electricity generated, is essential to that. We are proud that this cutting-edge project is, once-again breaking new ground, and ensuring Wales is playing a central role in the race to develop the UK’s significant tidal resources.”
Chris Williams, Development Director at TEL, adds:
“The ability of any project to generate revenue is obviously key to its long-term commercial success. This contract will mean that DeltaStream will have guarantees around what price it will receive for the electricity it sells to the market. At the same time, the PPA represents the beginning of a long term relationship with EDF Energy who we are delighted to be working with.”
Dan Brimelow, Export Sales and Procurement Manager at EDF Energy, said: “The UK needs electricity generation from a range of low carbon sources. Technologies like tidal power help improve the diversity of electricity supplies and reduce our reliance on imported energy which is good for the country’s future energy security.
“By taking the time to understand Tidal Energy’s plans, we structured a PPA that gives them the income certainty they need to satisfy investors, and also manages the risks around forecasting how much power they would produce.”
Press Release, September 25, 2014